Legalmatter

By: Brian J. Meli

For nearly forty years the fault line dissecting freedom of speech under the First Amendment has been a concept as widely accepted in judicial circles as Newton’s law of gravitation in scientific ones. One side of that line belongs exclusively to commercial speech, more commonly known by its street name: advertising. The other side is the domain of non-commercial speech, which is more or less anything that isn’t advertising. Both are protected, but only the latter is considered sacred, and therefore except for a few rare instances (“fire!” in a crowded theater) it’s off-limits to regulators. The distinction is so widely recognized that no one gives it much thought anymore. If you’re the CMO of an e-cigarette company, you know there are limits to what you can say in your advertising, and on your labeling and packaging. But if you’re invited to appear on 60 Minutes, or you’re interviewed by the Wall Street Journal, you’re largely free to express your personal opinions about your product. Whether or not you’re actually conscious of the fact that the former is commercial speech and the latter likely isn’t, you inherently know there’s a difference. 

But what is the difference exactly? In both cases you could be making product safety and efficacy claims that consumers may rely on to make a purchase decision. The practical answer, at least for anyone who isn’t a First Amendment scholar, is very little. But the Supreme Court needed to draw a line in the sand somewhere so regulators like the Food and Drug Administration (FDA), the Federal Trade Commission (FTC), and states attorneys general offices would have a framework within which to regulate false, deceptive and misleading commercial messages. And so, for better or worse, we have the following somewhat crude and outdated definition of what constitutes commercial speech today: speech that primarily proposes a commercial transaction.

And therein lies both the solution and the problem.

Answering yesterday’s questions

Frequent readers of this blog know that I’ve written in the past about how the commercial/non-commercial speech line is becoming blurred to the point of irrelevancy, and that the traditional legal definition of commercial speech, as last examined in depth by the Supreme Court in the early 1980s in Bolger v. Young’s Drug Products, is as outdated as the hairstyles of that bygone era. The truth is that in the 30+ years since the Supreme Court told us that commercial speech is speech that proposes a commercial transaction, the speed of technological innovation has changed the ways we communicate in inconceivable ways, allowing highly-skilled marketing minds to unleash their boundless creativity in fresh and ever more exciting ways.

Consider this billboard from an engineering school in Peru; exhibit 1A for how technology is changing the way advertisers interact with consumers:

Commercial speech by U.S. standards? Probably. The commercial transaction the billboard proposes, while not overt, is nonetheless clear: enroll at our school and learn skills that will change the world. And it was created with the help of an advertising agency, whose very purpose is to create commercial messaging. But simply calling this advertising seems naive, if not unfair. The sales message here is not only secondary to the primary purpose of the billboard; but it’s not even a close second. And its being disseminated by an institution of higher learning, presumably a not-for-profit one. What if instead of an engineering school, the billboard was erected by Mohen or Dasani? Would the answer be any different? Should it be?

This is obviously an extreme example intended to advance a theoretical discussion. The vast majority of advertising doesn’t live nearly this close to the line. But make no mistake, it’s not a subject confined to socratic academic debate, or in-chambers deliberations. It’s a concept with real-world significance to marketers who are putting seven and eight figure budgets behind ad campaigns aimed at entertaining and informing people as much as they are at convincing them to buy anything. Just ask JewelOsco about the perils of assuming that free-speech provides blanket cover for corporate communications that don’t “sell” anything.

So many advertising dollars are flowing toward this variety of soft brand and category messaging that entire cottage industries have sprung up to support the demand. Cause-related marketing, content marketing and native advertising are all fields involving advertising that not only lacks an overt commercial proposition, but which may not even attempt to persuade anyone to do anything besides adopt a particular mindset.

In reality, that First Amendment line of demarcation has gone the way of Route 66; a quaint, nostalgic concept with very little modern-day application. The line really more closely resembles the spheres of a venn diagram, with pure commercial speech in one circle, pure non-commercial speech in another, and a lot of native, cause-related, social media, grassroots, viral and guerrilla advertising existing somewhere at the intersection of the two.

Judges are aware of the growing complexity, and given the lack of updated guidance from the highest court in the land, lower courts are taking the initiative in filling the void. The result is a patchwork of various interpretations of Supreme Court precedent in different jurisdictions. Most recently, the Ninth Circuit lent its voice to the discussion in Dex Media v. City of Seattle, a 2012 case which stands for the proposition that when speech contains both commercial and non-commercial elements, the nature of the speech in question must be considered as a whole. In Dex, the ninth circuit applied the more than 30 year-old Bolger factors in analyzing government regulation of phone books. Those factors are: 1.) Messaging format (ie. is the message in a medium typically used for advertising?) 2.) The presence of specific product/service references, and 3.) The existence of an underlying economic motive.

The court concluded that yellow page directories, as a whole, were not commercial speech; even though they certainly consisted of elements that were. Could this same line of reasoning lead a finder of fact to conclude that a message like the UTEC billboard as a whole isn’t commercial speech? It’s certainly possible.

The problem with trying to apply the same old commercial speech doctrine in today’s world of hybrid messaging is two-fold. First, and most obviously, the Bolger factors are becoming less and less relevant. Are platforms like Twitter and Facebook message formats typically used for advertising? If you answered yes to that question, remember that the ninth circuit doesn’t believe that phone books are, so how is social media any different? In a world where no physical object, open space or gigabyte is beyond the reach of advertising, what’s the point in considering whether or not a message exists in a format that’s traditionally associated with advertising?   

The other two Bolger factors are of equally questionable utility today. Given how pervasive native advertising has become, if sponsored content doesn’t mention a brand or a specific product by name (which it usually doesn’t because that’s the point) does that second factor even matter anymore? And just how attenuated can a profit motive be before it’s considered insignificant? If a consumer tweet or Facebook post supporting a brand comes in response to an advertiser encouraging that opinion, feedback or customer experience, does the consumer’s freedom of speech take a back seat to any underlying economic motive the advertiser may have? The FTC seems to think so, as evidenced by their position on this recent Cole Haan social media promotion. Meanwhile, in the seventh circuit, the profit motives of companies, whether they’re secondary or not, seem to trump corporate free speech.

The second problem, and the less obvious one, is that Bolger, Central Hudson Gas and Electric, Virginia State Board of Pharmacy and the rest of the 1970’s and 80’s First Amendment cases that form the backbone of the modern-day commercial speech doctrine all dealt with judicial review of government regulation of private speech. But today it’s common for advertising challenges and claims of unfair and deceptive trade practices to be brought by private parties under the federal Lanham Act or equivalent state statutes; the latest high-profile example of this coming just last month courtesy of Katherine Heigl’s lawyer. Should the precedents established in those early First Amendment cases apply equally to cases where there’s no issue of government intrusion? It’s a question I examine in greater depth here.  

‘Commercial’ defined by contract

Confusion surrounding the definition of commercial speech in the private sector is about more than just unfair competition. It has contractual implications for companies that deal in intellectual property as well. So while the natural inclination may be to regard this as an issue best left to the courts and the regulatory bodies to sort out, it’s easy to overlook the degree to which businesses deal with it everyday.

When content licenses, such as the ones issued by Getty Images and others, restrict the use of their intellectual property to “non-commercial uses,” what exactly does that mean? Is the contractual definition the same as the Supreme Court’s definition? If the contractual definition is different, is it substantially similar among content providers across different industries? And perhaps most importantly, do the licensees entering into these contracts share a common understanding of what constitutes impermissible commercial use with the licensors on the other end of the transaction?

Based on survey evidence from Creative Commons, it appears the answer to that last question may be no. Creative Common’s non-commerical license prohibits use “in any manner that is primarily intended for or directed toward commercial advantage or private monetary compensation.” But when probed, users’ interpretation of that line varied considerably. Specifically, there was disagreement among respondents about whether or not use of Creative Commons creative by not-for-profit organizations fell within that definition.

Getty meanwhile, the largest broker of stock image licenses on the Internet, and a frequent threatener of lawsuits against individual alleged infringers, recently introduced a program whereby users can embed images from its online image library directly into their website, free-of-charge. The catch? There are two: First, you can only use the embedded images for non-commercial purposes, which according to Getty means the images “may not be used: (a) for any commercial purpose (for example, in advertising, promotions or merchandising) or to suggest endorsement or sponsorship.” (A fair to middling improvement on the judicial definition at best.) And second, you consent to allow Getty to electronically track your usage to confirm that you’re in fact complying with that restriction. But the million dollar question, and the one Getty and others have been slow to answer, is: when does a blog, website or social media page go from supporting a cause or a hobby to promoting commerce? What factors must be present, and what happens when they are?

Clarification is obviously needed, and eventually we will get it. The question many are asking is when. But perhaps a more intriguing question is where. Driven by necessity will the private sector, rather than the courts, take the lead on providing an updated, uniform definition of commercial use that we can all live and work with?

While we wait and see, it remains prudent to proceed with caution if you’re an advertiser, given the lack of clarity out there. That means if there’s a question about whether or not a given message is commercial speech, it’s probably good policy to operate under the assumption that it is, until someone tells you it isn’t.

The content of this blog is intended for informational purposes only. The information provided in this blog is not intended to and does not constitute legal advice, and your use of this blog does not create an attorney-client relationship between you and The Law Firm of Brian J. Meli. Under the rules of certain jurisdictions, the material included in this blog may constitute attorney advertising. Prior results do not guarantee a similar outcome. Every case is different and the results obtained in your case may be different.